The Denver-Aurora-Lakewood Consumer Price Index showed no movement between July and September, although various items in the basket of goods to measure inflation did shift around, according to an update Thursday from the U.S. Bureau of Labor Statistics.
Annual inflation rose 1.4% in September in metro Denver, matching the 1.4% annual pace seen in July. Denver’s inflation rate is running cooler than the 2.4% rate measured nationally in September with only Tampa, Fla., having a lower rate.
Housing costs, a dominant item in the CPI, are down 0.6% over the past two months and up 1.4% on the year, matching the overall rate.
Prices for food eaten at home are down 1.1% since July and down 0.4% on the year, with a 5.2% annual decline in meat, poultry, fish and egg costs helping bring them lower. Prices in most food categories moved lower as summer came to an end, exceptions being cereals and baked goods and “other” items eaten at home.
The cost of eating out, however, remains a pinch point for Denver-area consumers, with prices up 0.5% since July and 5.8% since September 2023.
Energy prices have fallen 8.7% in the past year led by a sharp drop in natural gas prices, which should help consumers out whenever winter arrives. Gasoline prices are down 12.2% on the year, although they rebounded 2.2% between July and September.
Clothing costs, which had been falling much of the year, shot up 6.8% since July but remain 5% below year-ago levels. Other goods and services, a broad category, saw prices increase 7.15% in the past year and are up 1.75% since July.
Used car prices fell 4.3% in the past two months, while new car prices were down 0.3%.
The good news on inflation in metro Denver, however, was overshadowed by stronger-than-expected gains in prices nationally, which had analysts questioning whether the Federal Reserve will continue on the path of aggressive rate cuts it started on in September.
“This is not what the Fed wanted to see after its bold move in September and virtually rules out another large cut in November. While we still lean toward a quarter-point reduction, much will depend on whether we see a second straight strong jobs report in October,” said Sal Guatieri, a senior economist with BMO Capital Markets in a research note.
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Originally Published:
After a period of noteworthy escalation marked by higher consumer prices and intense discussions amongst economic observers and policymakers, signs are emerging that inflation appears to be flattening out in an encouraging development for households and economies worldwide.
In recent months, the dramatic climb in inflation sparked concerns about the global economic recovery post-COVID-19 and elevated fears about the possibility of a longer-term inflationary trend. Although inflation is widely accepted as a naturally occurring economic phenomenon, its rapid rise was alarming, primarily because of the potential to erode purchasing power, increase the cost of living and create instability in financial markets.
The early years of the pandemic saw massive disruptions in supply chains, culminating in a sharp increase in raw material prices, which businesses passed onto their customers in the form of higher costs. Concurrently, the stimulus policies to buffer economies from the pandemic’s impacts led to burgeoning demand, sending inflation rates soaring.
However, current data suggests that the steep inflationary curve is starting to level off. The flattening could mean the feared return of persistent high inflation might not materialize, providing much-needed relief for consumers, businesses, and policymakers. Economists regard the fallout from the pandemic as likely to produce temporary rather than enduring inflationary pressure.
Reviewing the economic indicators reveals that raw material prices, previously escalating at a rapid pace, have started to stabilize. From lumber to metals, commodities that played a crucial role in driving inflation upward are showing signs of easing. Likewise, semiconductor shortages, a significant contributor to the spiking prices of consumer electronics and automobiles during the pandemic, are beginning to recover.
Furthermore, as more of the world receives the COVID-19 vaccines, the global economy is working towards rebuilding itself. As this continues, supply chains once interrupted can subsequently regain stability, alleviating the price pressures and mitigating demand-pull inflation. The employment rates are also improving, suggesting that businesses are gaining confidence in the strength of the economic revival, thus reversing some pandemic-era wage inflation.
Central banks globally are breathing a sigh of relief as inflation rates begin to stabilize. For months, these institutions have been managing a delicate balancing act between nurturing the recovery and curbing inflation. The Federal Reserve, for instance, has consistently maintained that the inflationary surge will be transitory despite public and political pressure.
In conclusion, while the current data on inflation is encouraging, it is worth cautioning that this period of economic recovery is still subject to various uncertainties. The prospect of new virus variants, bottlenecks in global supply chains, and geopolitical tensions can all exert upwards pressures on inflation. Policymakers will have to remain vigilant and flexible to adjust their strategies as the situation evolves. However, for now, the flattening graph of inflation offers economies around the world a moment of respite and a glimmer of hope for steady recovery and stability.
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Inflation looks to have flattened out
